MP Demands Answers on New KCC Sale as Sotik Plant Dues Go Unpaid

Kenya · POLITICS

A Kenyan MP is demanding that Parliament establish who actually controls the New KCC plant in Sotik, what is owed to farmers and suppliers, and under what rules the state dairy processor would pass into private hands.

Plans to privatise New Kenya Cooperative Creameries, the fully state-owned dairy processor known as New KCC, have run into formal resistance in Parliament. On 12 September 2026, Sotik MP Francis Sigei asked the National Assembly’s Departmental Committee on Agriculture and Livestock for a statement on the company’s future, warning that a poorly handled transition could hurt dairy farmers, employees and other stakeholders.

An MP demands ownership clarity for the Sotik plant

Sigei wants the committee to establish the current ownership and operational status of the New KCC plant in Sotik and to provide details of any plans, timelines and procedures for transitioning the company from state ownership to private management, The Star reported.

The lawmaker said reports of the planned transition had heightened concern among farmers, employees, suppliers and service providers, with some stakeholders allegedly yet to receive payments. He raised particular concern that some dues, including statutory deductions, had reportedly not been remitted since June.

His demands go further than ownership. Sigei asked the committee to explain the policy rationale behind the proposed change, detail any public participation undertaken with dairy farmers, cooperative societies, employees, suppliers and consumers, and order a comprehensive audit of all outstanding debts and liabilities involving the Sotik plant. That includes money owed to farmers, cooperatives, suppliers, employees and other creditors.

He also wants safeguards for public investments at the plant — land, buildings, machinery, equipment and infrastructure — against loss or improper disposal during any transition, plus clarity on the regulatory and oversight framework that would govern New KCC under private management.

The legal wall came down in February

The privatisation question returned because the legal obstacle that blocked it for two years is gone. The High Court had declared the Privatisation Act 2023 unconstitutional on 24 September 2024, citing the absence of meaningful public participation and faulting a provision that sidestepped Parliament’s oversight role. The Court of Appeal upheld that decision in April 2025.

Parliament responded with a replacement: the Privatisation Act 2025, assented to on 15 October 2025 and in force since 4 November 2025. On 19 February 2026, Justice Bahati Mwamuye of the High Court in Nairobi dismissed multiple constitutional petitions against the new law and declared it constitutional and valid, a ruling the Standard described as a major win for President William Ruto’s administration that cleared the path for the sale of key state firms.

One nuance matters for New KCC: the 2025 Act is a framework law and does not itself list companies for sale. Entities are designated through a privatisation programme approved by Cabinet and ratified by the National Assembly. Treasury and media listings of targeted firms under the revised framework include New KCC alongside Kenya Pipeline Company, Kenyatta International Convention Centre, Kenya Literature Bureau, National Oil Corporation, Kenya Seed Company and Rivatex.

A strategic processor that keeps losing money

New KCC was established in 1925 as the Kenya Co-operative Creameries and rebranded as New KCC in 2005. It remains fully state-owned — and deeply troubled financially.

The company posted a net loss of about KES 953 million (about US$7.4 million) in the financial year ended 30 June 2025, its fourth consecutive year with a going-concern warning from auditors. Government grants reached KES 2.4 billion (about US$18.5 million) in that year, after KES 1.5 billion (about US$11.6 million) the year before. Over the past three years, the state has injected roughly KES 6 billion (about US$46 million) to stabilise operations and clear farmer arrears.

Operationally, the processor has collected between 82 and 87 million litres of milk annually for five consecutive years, against budget targets of 120 to 122 million litres — only about 70 percent of plan. Kenyan business media reported in January 2026 that the government is weighing leasing New KCC to private operators if its latest KES 2 billion (about US$15.5 million) bailout fails to turn the company around. President Ruto has separately spoken of restructuring New KCC to become farmer-owned, along the lines of the Kenya Tea Development Agency model.

Dollar conversions in this article use the Central Bank of Kenya rate of about 129.45 shillings per dollar.

Farmers and cooperatives push back

The political resistance predates the current administration. On 29 March 2019, the Cabinet resolved to remove New KCC from the privatisation programme. Then Cooperatives Cabinet Secretary Simon Chelugui reaffirmed that position in December 2023, saying the resolution "still stands and it can only be reversed by a similar Cabinet resolution."

Chelugui argued at the time that New KCC is a buyer of last resort for farmers and that cooperatives should get first priority in any future sale. That position aligns with dairy farmers who fear losing a guaranteed market and a floor price for their milk if the processor passes into private hands — exactly the concern Sigei now carries into Parliament.

IMF pressure meets farmer politics

The Treasury’s broader privatisation push is tied to International Monetary Fund-backed fiscal consolidation. The original 2023 programme targeted 11 state enterprises with assets above KES 200 billion (about US$1.5 billion), and the 2024 court ruling that voided the first law complicated efforts to unlock more than KES 77.5 billion (about US$600 million) in IMF funding.

In February 2026, days after the High Court upheld the new law, an IMF mission opened negotiations in Nairobi on a successor loan programme of about US$3.6 billion, with state-owned enterprise reform — including timelines for selling further entities — among the conditions under discussion.

That places New KCC within a wider African pattern: creditor-backed restructuring of state assets versus domestic pressure to protect strategic, farmer-linked companies. For many smallholders, the state creamery remains the buyer that shows up when private processors pull back.

What to watch next

The immediate test is the Agriculture and Livestock Committee’s response to Sigei’s statement request: the ownership and operational status of the Sotik plant, the debt audit he demands, and the transition timetable, if any. No formal transaction for New KCC under the 2025 Act has been publicly launched.

Any sale or lease would still need a Cabinet-approved privatisation programme ratified by the National Assembly, fresh public participation, and an answer to the unresolved 2019 Cabinet resolution that took New KCC off the list. Expect the cooperative movement and dairy lobbies to fight for the farmer-ownership model Ruto himself has floated.

For broader context on how debt, reform and outside interests intersect across the continent, see Africa: The New Scramble.

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